Kotaku has heard from multiple sources close to the project that the code-name for Microsoft's …
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Today, website MCVUK reported a source revealed that the next Xbox apparently won't have a disc drive. Instead, according to MCVUK, the next Xbox "will offer compatibility with some sort of interchangeable solid-state card storage, although it is not known whether this will be proprietary or a more standard format such as SD."

The console, MCVUK added, is slated for a 2013 release.

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The source supposedly told MCVUK this info was issued under "the strictest NDA" the source has seen.

This rumor differs from what Kotakupreviously heard—namely, that the next Xbox will upgrade its disc format to Blu-ray.

Microsoft will upgrade its disc technology for its next Xbox from DVDs to Blu-Ray discs, catching…
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If MCVUK's report is true, then what would a disc-less system mean for backwards compatibility? What about as an entertainment device? A disc-less console would make it impossible to watch Blu-ray movies without an add-on peripheral.

Kotaku is following up with Microsoft and will update this post should the company respond.

Update:A Microsoft spokesperson told Kotaku, "Xbox 360 has found new ways to extend its lifecycle like introducing the world to controller-free experiences with Kinect and re-inventing the console with a new dashboard and new entertainment content partnerships. We are always thinking about what is next for our platform and how to continue to defy the lifecycle convention. Beyond that we do not comment on rumors or speculation."